Board approves double-digit rate reduction plan

April 13, 2011

Vinita— The Grand River Dam Authority Board of Directors has approved a long-range plan that will reduce base electric rates to GRDA electric customers by 2 percent later this year, then return rates to December 2009 levels (a reduction of approximately 10 percent) in July 2013. The board approved the plan at its April 13 meeting in Vinita, where it also discussed another possible 10 percent decrease effective July 2014.

The action reinforced projections developed in November 2010, at the time of GRDA’s most recent bond issue for capital improvements, and were adopted by the GRDA Board as a guideline for GRDA staff and customers.

According to GRDA Chief Executive Officer Kevin Easley, economic conditions and aggressive, modern management cost-saving measures have led to improved net revenues for the utility. Meanwhile, more sales to industrial customers were expected to add to revenues while new agreements for sales to cities and rural electric cooperatives in Western Oklahoma also contributed to rate reduction plans.

“Although GRDA will see some increases in fuel costs and costs of rail delivery of coal during the next several years, we do not see our costs increasing at a rate any greater than other utilities,” said Easley. “So we expect our competitive position as a leading low-cost provider of electric services to be reinforced by these rate reductions.”

While there has been considerable media coverage related to rate increases for other Oklahoma utilities making capital improvements to meet air quality guidelines, Easley added that GRDA has already planned for such improvements.

“GRDA’s financial forecast shows we will meet all environmental requirements without having to resort to rate increases,” said Easley. “In fact, our financial forecast has provisions for significant investment in low nitrogen oxide burners at our coal-fired facility and other investments in the next eight years.”

However, if current bills do become law, they would strip GRDA’s ability to charge for raw water. Currently, GRDA is responsible for oversight of water resources in the Grand River drainage.

Revenues from raw water sales return just a small portion of GRDA’s overall cost of lake management in the Grand River. And while those water sales equate to less than a million dollars annually, GRDA points out the greater significance may be that unrestricted amounts of water could be to be taken from the reservoirs. That could potentially impact lake levels, GRDA’s ability to generate hydroelectricity, as well as the water supply for the GRDA Coal Fired Complex.

While water district residents have objected to paying for any of GRDA’s water-related costs, Easley stated GRDA would follow the direction of the Oklahoma Legislature and losses of water revenues would have to be absorbed by Oklahoma electric rate payers.

Headquartered in Vinita, GRDA is funded by the revenues from the sale of electricity and water. GRDA built and operates the Pensacola Dam (Grand Lake), Robert S. Kerr Dam (Lake Hudson) and the Salina Pumped Storage Project (Saline Creek arm of Lake Hudson) on the Grand River. These facilities, along with the GRDA Coal-Fired Complex and the Red Bud Gas Plant combine for a total generation capability of 1,480 megawatts. GRDA transmits and delivers this wholesale electricity across Oklahoma municipal, electric cooperative and industrial customers.